Question

Your client just won the lottery and has the option of receiving $1 million today or $100,000 per year for 20 years. What is your recommendation assuming a 9% discount rate? What is your recommendation assuming a 7% discount rate?

Choose one answer.

Take the $1 million payout if the discount rate is 9%; take the annuity payout if 7% is the discount rate |
||

Take the $100,000 annuity payout in either discount rate scenario |
||

Take the $1 million payout in either discount rate scenario |
||

Take the annuity payout if the discount rate is 9% take the $1 million payout if the discount rate is 7% |

Answer #1

Alex Meir recently won a lottery and has the option of receiving
one of the following three prizes: (1) $70,000 cash immediately,
(2) $24,000 cash immediately and a six-period annuity of $8,100
beginning one year from today, or (3) a six-period annuity of
$14,500 beginning one year from today. (FV of $1, PV of $1, FVA of
$1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate
factor(s) from the tables provided.)
1. Assuming an interest rate...

Alex Meir recently won a lottery and has the option of receiving
one of the following three
prizes:
$64,000 cash immediately, (2) $20,000 cash immediately and a
six-period annuity of $8,000
beginning one year from today, or (3) a six-period annuity of
$13,000 beginning one year from
today. Assuming an interest rate of 6%, which option should Alex
choose?

Oxana recently won $100,000 in the lottery. She has the option
of receiving the entire $100,000 today or she can receive two
payments of $51,500 one year apart, with the first one today (so
$51,500 today and another $51,500 in one year). For simplicity,
assume that lottery winnings are not taxed and that there is no
inflation.
Suppose the interest rate is 4%. Which option should Oxana
choose?
Suppose the interest rate is 0%. Which option should Oxana
choose?
What...

On November 16, 2015 your client won $31.25 million in the
lottery. The lottery commission gave them the option of receiving a
lump sum or a 25-year annuity paying $1,250,000 each year, with the
first payment received on November 16, 2015 and the last payment to
be received on November 16, 2039. Your client decided to take the
annuity option and has received four payments so far. The annuity
payments are made annually by Canada Life Assurance on November 16...

your friend just won the lottery. he has a choice of receiving
$214,403 a year for the next 23 years or a lump sum today. the
lottery uses a 14% discount. What would be the lump sum your friend
receives

Show steps
Congratulations! You have just won $20 million lottery. You will
be paid $1 million a
year
for the next 20 years – and you receive your first check today.
Ignoring, for the
moment,
the taxes you’ll have to pay, what are your winnings really worth
today?
Assume an 7% discount rate.

1.) You just won the $85 million lottery. You will receive $2.6
million a year for the next 30 years plus an additional payment of
$7 million at the end of 30 years. The interest rate is 6
percent.
How much is your lottery prize worth today?
2.)If you owe $51,000 payable at the end of eight years, what
amount should your creditor accept in payment immediately if the
interest rate on the loan is 13 percent?
3.) You have...

You just won a $1 million lottery today, and the rule of the
lottery is to pay you $40,000 per year for the next 10 years,
followed by $60,000 per year for the following 10 years. The first
payment starts one year from now. You estimated the appropriate
interest rate is 10% pa, what is the winnings worth today?

Alex Meir recently won a lottery and has the option of receiving
one of the following three prizes: (1) $82,000 cash immediately,
(2) $30,000 cash immediately and a six-period annuity of $9,000
beginning one year from today, or (3) a six-period annuity of
$17,000 beginning one year from today. (FV of $1, PV of $1, FVA of
$1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate
factor(s) from the tables provided.)
1. Assuming an interest rate...

You just won $1 million dollars in the lottery! They offer you
two options for your winnings: a lump sum payment right now, or
$100,000 a year over the next 10 years. Current 10-year interest
rates are at 5%, and the current tax on lottery winnings is
40%.
What is the amount you will receive today with the lump sum
option?
Which option would you select? How would you present your
argument for your decision in a debate?
Sorry, you...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 22 minutes ago

asked 26 minutes ago

asked 26 minutes ago

asked 26 minutes ago

asked 38 minutes ago

asked 48 minutes ago

asked 49 minutes ago

asked 53 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago